Data centers are suddenly everywhere — but some say "no thanks"

The big picture: Whenever you join a Zoom meeting, save photos to the cloud or stream videos online, you depend on a data center.

• Data centers resemble windowless warehouses, and Microsoft, a major operator of them, says eachcan employ as many as 50 people.
• Data center inventory across North America's largest markets — Northern Virginia, Silicon Valley, Dallas and Chicago — grew nearly 25% in Q1 2024 compared to the same period in 2023, per a June report from real estate group CBRE.

Driving the news: Citizens Action Coalition, a ratepayer advocacy group, this week called on the Indiana General Assembly to enact a moratorium on new "hyperscale" data centers, which are large projects that support cloud computing and are used to power artificial intelligence.

• "Hoosiers must be fully protected from the rapacious resource needs, massive tax subsidies and extraordinary utility cost burden associated with these facilities that could lead to skyrocketing utility bills across Indiana," said Kerwin Olson, the group's executive director.
• The coalition asks lawmakers to study which policies could be adopted to protect Hoosiers before lifting the moratorium.

Zoom in: The Indiana Michigan Power Company is forecasting the data centers it will serve in northern Indiana will use more electricity by 2030 than all Hoosiers statewide will use in their homes.

• The energy needs of these and future data centers are raising questions about where that power will come from. Some advocates are concerned that Indiana will reverse its progress in moving away from coal-fired power.

What they're saying: "Hyperscaler data centers are the single biggest threat to affordability, reliability, and environmental sustainability in Indiana this decade," said Ben Inskeep, program director for Citizens Action Coalition.

State of play: Data center builders often promise new jobs and other benefits — but there's rising bipartisan opposition on issues from aesthetics and noise to housing costs and national security.

• In Northern Virginia, which houses the world's biggest collection of data centers, some residents are advocating for regulations on what they consider noisy eyesores gobbling up land and power.
• Atlanta's city council banned data centers near transit stations in September, with one member arguing that they conflict with housing, parks, and other land use demands.
• Earlier this year, the White House ordered the Chinese owners of a Wyoming cryptomining data center near a U.S. nuclear missile base to shut down and sell the facility, citing national security.

Threat level: Data centers are also driving a surge in electricity demand — especially amid the rapid growth of new AI tools.

• Utilities now estimate data centers will need nearly 40 gigawatts of additional electricity by 2028, per a December 2023 report from consulting firm Grid Strategies — nearly double their prior guess.
• Barclays researchers see data centers accounting for at least 9% of overall electricity demand by 2030, up from 3.5% today.

• Demand is so high that at least one mothballed nuclear reactor, Pennsylvania's infamous Three Mile Island, might come back online to power them.

Friction point: Politicians in some states are starting to act on data center skepticism.

• In Texas, where electricity consumption is growing fastest nationwide, Republican Lt. Gov. Dan Patrick has asked lawmakers to evaluate the state's ability to keep pace with the increasing demand.
• Data centers and cryptocurrency mining "produce very few jobs compared to the incredible demands they place on our grid," Patrick wrote after the Texas grid operator predicted electricity demand could nearly double in six years.
• "Texans will ultimately pay the price. ... We want data centers, but it can't be the Wild Wild West of data centers and crypto miners crashing our grid and turning the lights off."

Reality check: Data centers are still getting built left and right, often with cushy incentive packages.

• At least 30 states have passed legislation providing tax incentives to attract data centers.
• In 2019, Indiana lawmakers passed a sales and use tax exemption that eliminates sales and use taxes on purchases of qualifying data center equipment and energy for up to 50 years.

The other side: "While data centers do not directly create large employment opportunities, they do create a significant amount of high-end construction employment for a period that typically runs around 24 months," per researchers at investment firm CBRE.

• "Additionally, these assets, once built, are a key component of a company's overall operating environment and can create a long-term investment in a community."
• "Data centers are dedicated to being good neighbors in their communities," Dan Diorio, director of state policy at the Data Center Coalition, which represents data center operators, tells Axios.

The bottom line: America needs data centers — what's less clear is where to put them.